The sequential arrangement of nucleosomes along the chromatin fiber is punctuated by highly nuclease-sensitive sites. We previously mapped such sites to the 5-foot terminus of several heat shock genes in Drosophila by a novel indirect end-labeling technique. Such preferentially accessible sites in chromatin may function as points of entry to the DNA for RNA polymerase and control proteins. We have now developed an exonuclease protection technique for mapping protein binding sites in chromatin, and have found two such sites for both the hsp 82 and hsp 70 genes. Site I is present before and after heat shock gene activation, and covers the TATA box sequence, whilst site II surrounds the upstream heat shock control element and appears only during heat shock. We suggest that heat shock genes are activated by the sequential binding of at least two protein factors, and we are currently developing new methods to assay for these factors in cell-free extracts. To determine the functional relationship of 5-foot terminal hypersensitive sites in chromatin to gene activity, we have developed an in vitro transcription system from Drosophila nuclei, which is capable of new RNA transcript initiations.